Europe close: Stocks little changed ahead of Fed decision

By Alexander Bueso

Date: Thursday 08 Nov 2018

(Sharecast News) - Stocks across the Continent finished the session little changed, although Italian issues came under some selling pressure, although for the most part investors appeared to opt and stay on the sidelines ahead of the US central bank's policy decision later in the day."For the most part, tonight's FOMC meeting seems a foregone conclusion, with markets giving just a 13% chance of a rate hike," said IG's Josh Mahony.

"However, even that 13% chance adds some form of hesitancy for markets, with an early shift in rates signalling that we are seeing the Fed front-run market expectations."

By the end of trading, the benchmark Stoxx 600 had trimmed earlier gains to stand up by 0.19% or 0.69 points to 367.08, while the German Dax had dipped 0.45% or 51.78 points to 11,527.32.

Italy's FTSE Mibtel on the other hand was down by 0.57% or 111.80 points to 19,429.14.

To take note of, according to some market observers, the outlook for trade negotiations with China and interest rates in the US may be the main determinants of where stockmarkets are headed in the very near-term.

Against that backdrop, and weighing on Milan traded shares, according to the European Commission's Autumn Economic Forecasts, Italy's public spending deficit was now seen ballooning to -2.9% and -3.1%, as a proportion of the country's gross domestic product, in 2019 and 2020.

Significantly, the deficit forecast for next year was well above the 2.4% target set out by officials in Rome in the budget proposals they submitted to Brussels, while that for 2020 was above the 3.0% limit set out in the euro area's so-called Stability and Growth Pact.

In response, Italian finance minsiter, Giovanni Tria, said the Commission's estimates were the result of an "inadequate and partial analysis".

On the back of those projections, the yield on the benchmark 10-year Italian government note rose six basis points to 3.40%.

Economic data published on Thursday in the euro area was a tad on the weak side.

According to the Federal Office of Statistics, Germany's seasonally adjusted trade surplus slipped from €18.2bn in August to €17.6bn for September as exports fell more quickly than purchases from overseas.

In Spain meanwhile, INE reported that industrial production in the Mediterranean country shrank at a 0.7% month-on-month pace in September (consensus: -0.2%).